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International Tax Review 2016

European Law Firm of the Year

The Hedge Fund Journal 2015

Financial Times 2012-2016

Matheson is ranked in the FT50 most innovative

law firms in Europe 2016. Matheson has also

been commended by the Financial Times for

innovation in corporate law, finance law, dispute

resolution, corporate strategy, human resources,

technology and data analytics

Trusteeship Model of the FutureMaster TrustsIIPM / APLI Seminar

Brian Buggy, 7 December 2016

Master Trusts

Why are we interested?

What are they?

What are the issues?

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Master Trusts – why are we interested?

Universal Retirement Savings (auto-enrolment)

National Pensions Framework 2010

OECD Report 2013

Government policy to increase coverage

Reform and simplification

Pensions Authority Consultation July 2016

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Master Trusts – what are they?

“Occupational schemes whose contributing members may be

employees of unrelated employers”

(Pensions Authority: Reform & Simplification consultation document,

18 July 2016)

No statutory definition in Ireland (because no specific regulation in

Ireland)

“Occupational trust-based pension scheme established by declaration

of trust which has been promoted to provide benefits to employers

which are not connected and where each employer group is not

included in a separate section with its own trustees”

The UK Pensions Regulator: DC Regulatory Strategy, April 2015)

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Master Trusts – what are they?

UK Pensions Bill 2016 definition of “Master Trust”

“an occupational pension scheme which –

(a) provides money purchase benefits (whether alone or in

conjunction with other benefits),

(b) is not used, or intended to be used, only by employers

which are connected with each other, and

(c) is not a relevant public service pension scheme”

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Master Trusts – what are they?

Already have master trusts in Ireland

occupational pension schemes

trust RACs

Revenue approved

registered as schemes or trust RACs with Pensions Authority

Promoted by industry bodies or financial services

companies / consultancies

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Multi-Employer Schemes

“a scheme which applies to persons employed by more than

one employer” (s.2 Pensions Act 1990)

Different to master trust eg, multi-employer pension plans

(MEPP) common in Canada

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Trusts / Master Trusts

Occupational pension scheme

strong link with employer

trustees may be lay trustees / scheme members

Master trusts

employer provides (is required to provide) access to master trust

employer is not sponsor of master trust – agrees to pay

contributions

Promoted by financial institutions / consultancies

Professional trustees

Regulatory requirements

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What are the issues?

Master trust approval – Pensions Authority(?)

Prudential regulation

master trusts will require specific regulation (eg, APRA in

Australia)

Trusteeship – expertise / qualifications

Conflicts of interest

Financial stability

Employer / member participation – become detached

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What are the issues?

Remuneration and charges – transparency, publication

Switches between master trusts

Lost members

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Master Trusts - UK

UK Pensions Bill 2016 prohibits the use of a master trust scheme

unless such a scheme has been authorised by the Pensions

Regulator

Authorisation criteria include

that the persons involved in the scheme are fit and proper persons

that the scheme is financially sustainable

that each scheme funder meets the requirements set out

that the systems and processes used in running the scheme are

sufficient to ensure that it is run effectively

that the scheme has an adequate continuity strategy

11

Master Trusts - benefits

Enhance coverage (linked to auto-enrolment)

Reduce costs

Increase consumer protection

Improved outcome for members

Simplification

12

Master Trusts – reform and simplification

Increase expertise / qualification requirements on trustees

Introduce regulated master trust structures

Expect existing small schemes (less than 100 members)

wither over time

“The raising of standards for the governance of pension

schemes eg, in relation to authorisation and trustees, is good in

itself and should lead to a substantial and desirable reduction in

the total number of schemes on the market”

(Pensions Council October 2016 submission)

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“We believe that members of all work-based DC schemes

should be placed in quality products that are effectively

governed by competent people, durable and offer value for

money”

(The UK Pensions Regulator, April 2015)

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Auto-enrolment when introduced will increase growth in

master trusts

UK experience

by March 2015 coverage of all employees had increased to

59% (2012 – 47%)

94% of employers who chose a trust-based scheme opted for

a master trust

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Further reading

Ireland

Pensions Authority website

2006 Report on Trusteeship to the Minister for Social and Family Affairs

Consultation document on Reform and simplification of supplementary funded

private pensions (July 2016)

Response of the Pensions Council

Response of the Irish Association of Pension Funds (IAPF)

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Further reading

UK

The Pensions Regulator website

Automatic enrolment: Commentary and analysis (July 2015)

Strategy for regulating defined contribution pension schemes (April 2015)

Assurance reporting on Master Trusts (Master Trust Supplement to ICAEW

AAF 02/07) (September 2016)

House of Commons Report on Automatic Enrolment (May 2016)

Australia

Australian Prudential Regulation Authority

Australian Security and Investments Commission

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Brian Buggy

Matheson

70 Sir John Rogerson's Quay

Dublin 2

T: +353 1 232 2239

F: +353 1 232 3333

E: brian.buggy@matheson.com

W: www.matheson.com

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